9 Reasons to Switch to a Digital Bank

by / ⠀Personal Finance Startup Advice / May 19, 2021
9 Reasons to Switch to a Digital Bank

If you’re a CEO or business owner trying to manage your company’s financial situation, consider digital banking. Switching to a digital bank may prove beneficial when compared to dealing with a brick-and-mortar institution.

Small business owners in particular understand how time-consuming and costly banking can be. Online banking, however, can assist not only you and your employees but also your customers.

For many, “digital banking” refers to the digitization of processes that go into managing your business’s money. Services and processes previously offered by physical banks have now been made available, and easily accessible, via the internet. This means that you can complete routine banking tasks from the comfort of your office. Compared to traditional banks, digital banks offer customers not only the benefits of advanced technology but also several additional features unavailable elsewhere.

Although traditional brick-and-mortar banks remain a favored option, digital/online-only banking methods are growing in popularity. This trend is especially popular among business owners, with approximately 160 million American users as of 2019. The recent COVID-19 pandemic also led to increased numbers of digital banking users, as revealed by the Citizens Financial Group’s “Banking Experience Survey.”

This banking migration doesn’t appear to be temporary, either. Seventy-three percent of businesses surveyed suggested that their pandemic-related switch to online platforms was likely to remain a permanent decision. There are several reasons why switching to digital banks may be a good choice.

1. Increased Convenience

Digital banking allows businesses to deposit and transfer money, make withdrawals, open and manage various accounts, pay bills, and even manage payroll. All without anyone ever needing to leave the building. All that’s required is that you or your employees have a smartphone or the correct desktop application. You can do all of your banking in-house and save your lunch break for actually eating lunch.

The added convenience of digital banking is a major perk. It allows you to avoid unnecessary travel time and the hassle of adding bank runs to your busy schedule. Learning more about digital banking can save you some time in your initial search. Both the convenience and speed of online banking may pleasantly surprise you. Opening accounts with digital banks, for example, usually takes only a few minutes.

2. Accessibility (and Reassurance) at All Hours

The 24/7 nature of digital banking allows users to manage their accounts whenever and wherever they please. It’s also much easier to monitor suspicious activity, such as unapproved transactions, and dispute these issues in a timely manner. The traditional alternative has been to wait to address fraud problems in person during business hours.

Many online banks also provide services that are easily accessible to people with varying levels of banking expertise. The goal is to ensure that everyone’s user experience is smooth and friendly. Seniors, as well as those with disabilities, have become a high priority when it comes to digital banking. Banks are doing whatever they can to further enhance the inclusivity of their platforms.

If your job also requires a lot of travel, digital banking is probably your best option due to its accessible, practical, and flexible framework.

3. Affordability of Digital Banking

In comparison with traditional banks, digital services are considered to be the more affordable option, especially for newer companies. Physical institutions often charge fees to cover their overhead costs. Digital banks, on the other hand, have fewer overhead costs and, therefore, lower fees for the user. In general, it makes sense to take the time to look into the fees and service charges of any financial institution before making a decision.

4. Advanced Technology

Brick-and-mortar banks are doing what they can to digitize their services and keep up with the changing times. However, digital banks often have an edge when it comes to technological innovation and advancement that physical banks simply can’t match. They also have various business-specific digital solutions available to optimize the efficiency and quality of the company as a whole. These technologies include Card Swap, which allows you to manage your eCommerce and retail credit autopayment. It also includes Autobooks, which enables you to easily send invoices to customers online, accept electronic payments and review customer activity.

Finance technology methods digital banks utilize include:

  • Big Data. Used to better understand customers and take appropriate measures to ensure that they’re satisfied. This can often be done through means of further personalizing the platform to cater to individual needs.
  • Cloud Computing: Used to complete various banking tasks, such as processing transactions. This is typically available across multiple devices.

5. Online Banking Is Environmentally Friendly

Another reason CEOs may choose to switch to a digital bank is a desire to reduce their business’s environmental impact. It shouldn’t come as a surprise that switching to a digital bank reduces several costs that a physical building would require. These costs could include:

  • temperature regulation (HVAC systems);
  • electricity and lighting;
  • building maintenance; and
  • the creation, handling, and disposal of paper documents.

Several digital banks, such as Bank Purely, pride themselves on their eco-mindedness. They not only reduce waste wherever possible but also plant a tree whenever a new account is opened or an email sign-up is recognized. Signing with a digital bank may not only be more convenient for your business but could also benefit the natural world that we all live in. You may also gain inspiration for your own company and choose to go more “green.”

6. Increased Security

Like any other online service, protecting your company’s assets from theft is a top priority. Digital banks often go the extra mile to ensure that your money is safeguarded against fraudulent activity by undergoing risk-management processes. One means of doing so includes two-factor authentication tied to you as an individual. Of course, you should only permit access to online accounts to trusted employees.

7. Equally Convenient for Business and Personal Banking

Digital banking may initially appeal to you for business purposes only, but personal use is equally convenient. Business banking needs may differ slightly from personal banking, but the vast majority of institutions are qualified to deal with either situation.

Digital banking perks for businesses (especially small/startup businesses) can include:

  • greater visibility of assets/financial situation;
  • enhanced management and organization;
  • transactions synced with accounting;
  • customized employee access; and
  • security-threat alerts.

Digital banking perks for personal accounts often include:

  • convenience;
  • affordability;
  • new and improved finance technologies;
  • ease of use; and
  • time-saving flexibility.

8. Assistance for Small and Medium-Sized Enterprises (SMEs)

SMEs and startups usually require additional help, such as loans, to get their businesses up and running. Traditional banks, however, are sometimes hesitant to work with such clients. They will often decline loan applications if they seem too risky. With digital banks on the rise, additional startup tools have also spread across the virtual realm. The flexibility of digital banks can enable businesses working with them to thrive in ways that physical banks simply can’t match.

9. Hassle-Free Switching to an Online Bank

Switching banks can be a headache, especially if your company is moving between cities or countries. However, if all of your banking is online, you may not need to switch banks at all. Often enough, your digital bank provider will work with multiple internationally-based banks. Keep in mind that it’s essential to double-check the scope of your digital bank before signing up.

Potential Risks to Consider

In all fairness, switching to all-digital banking is not without its risks. It’s vital to consider potential downsides before making your decision. One of the biggest considerations is “the other side of the digital coin,” namely the lack of a physical branch location.

Some business owners prefer to visit banks in person, to speak directly about financial matters and gain advice. They balk at moving “relationship banking” online. Building personal relationships with the staff and/or manager becomes difficult when the branch is located strictly online. If problems arise, face-to-face communication may be needed. Other downsides might include:

  • internet server interruptions;
  • cyber threats;
  • rogue employees gaining access to accounts; and
  • mobile deposit limits.

The Bottom Line

If you’re a CEO or business owner, switching to digital banking is likely to offer multiple advantages for your company. As you would with any other decision, though, carefully weigh those benefits against risks. If you have an accountant or other financial advisor you trust, be sure to speak with them before making any important decisions. The flexibility, security, and optimized user experience are all reasons to consider moving your physical banking endeavors online. If you’re a smaller-sized business, in particular, digital banking may provide the answer to several financial dilemmas.

About The Author

Kimberly Zhang

Editor in Chief of Under30CEO. I have a passion for helping educate the next generation of leaders.